AMN / WEB DESK
Chairman Emeritus, Tata Sons. Chairman, Tata Trusts, Ratan Tata today welcomed the homecoming of Air India.
Ratan Tata was exteremly delighted after his conglomerate won the bid to acquire debt-laden Air India. Mr Tata, in a statement that he tweeted along with an old photo of former Tata group chairman JRD Tata, said “it will take considerable effort to rebuild Air India”, which has a debt of over ₹ 60,000 crore and loses ₹ 20 crore every day.
JRD Tata founded Air India as Tata Airlines in 1932. It was India’s first airline and operated only domestic flights at that time. The airline was nationalised in 1953 and split into two – a domestic airline and an international carrier.
Tata Sons has acquired Air India with a winning bid of Rs 18,000 crore, the government said today, a homecoming moment for an airline it founded but gave control to the state.
An empowered panel of ministers led by home minister Amit Shah gave its approval to the salt-to-software conglomerate’s offer over that of SpiceJet chairman Ajay Singh, the only other bidder in the fray. Singh bid in his personal capacity and his bid was around Rs 15,100 crore.
“M/S Palace Pvt Ltd, a wholly owned subsidiary of Tata Sons, had the winning bid,” said Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM), at a media briefing.
The reserve price for Air India, below which the government would not have accepted offers, was fixed at Rs 12,906 crore. Pandey said that the deal will be closed by December 2021.
Pandey said that total debt of Air India as on August 31 was Rs 61,560 crore. Debt which will be taken over by Tata will be Rs 15,300 crore while Rs 46,262 crore will remain with Air India Asset Holdings Ltd, which is a special purpose vehicle created to retain the non-core assets, land and the debt of Air India which Tata will not be taking on.
Fast forward to 2009, the government appointed State Bank of India to make a roadmap for the airline’s recovery after years of losses under state control and emergency of new players in the aviation sector. In 2018, the government’s offer to sell a stake in Air India fails to attract a single bidder by the deadline, with potential buyers citing onerous conditions. In October last year, the government got two bids after extending the deadline several times; the bids were from Tata Sons, and Ajay Singh, promoter of budget airline SpiceJet.